Safaricom 'facing split from M-Pesa'

Safaricom’s M-Pesa mobile money business should be split off from the main company, an unconfirmed report for the Communications Authority of Kenya is believed to recommend.

The sources for the story are unclear. Linus Gitahi, CEO of brokerage AIB Capital, has written in a Nairobi newspaper, the Daily Nation, that the report exists and that it was written for the Communications Authority by the research company Analysys Mason.

Analysys Mason told Global Telecoms Business: “We are working on a study on Kenya but that report has not been finalised and nor have the recommendations. It is still a work in progress.”

South Africa’s Business Day newspaper, which reported the recommendation “is rather premature in its summary of recommendations and is inaccurate”, said the Analysys Mason official.

Gitahi wrote that splitting off M-Pesa was included in “a raft of measures supposed to level the telecommunications playing field and tame Safaricom”, which has a 69% share of the mobile market.

He wrote that splitting off M-Pesa would have “untold consequences”, not just for the company but also for the economy of Kenya: about 79% of the country’s economy is processed through M-Pesa, a sum that was valued at $8.2 billion in the third quarter of 2016. “M-Pesa is a critical nerve supporting the money transfer system. Ripping away M-Pesa from Safaricom would leave both in severe distress,” wrote Gitahi.

The company is based in the UK but owned by South African IT consultancy Datatec. The Communications Authority told Business Day that it is reviewing the report before releasing it to the public. Vodafone owns 40% of Safaricom, but has kept the brand in Kenya rather than changing it to Vodacom, the brand it mainly uses in Africa.

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